I am amazed that you are amazed. This is a logical extension of Keynes, if one makes the not-so-logical assumption that Keynes was correct.

http://mangyredbonehound.wordpress.com/ mangyredbonehound

Not much of a surprise here. There is a large contingent on the left that believes wealth is not truly earned and instead belongs to the people, by which they mean the government, and that any amounts we (the people) are allowed to keep are merely due to the grace of our betters. Our current President is among that contingent.

Thus, spending is never the problem. Instead, all will be well if we just make those who have earned more than others pay their fair share so it can be redistributed according to the plan (five year or otherwise) of our noble bureaucrats.

The Democratsâ€™ resolve to continue with more of the same notwithstanding the current empirical evidence that it isnâ€™t working demonstrates that they are impervious to logic. The impossibility of paying for their orgy of spending by raiding only the wealth of high-earning entrepreneurs and investors demonstrates that they are also impervious to math.

Mitchell Wright

mangyredbonehound said:
"The Democratsâ€™ resolve to continue with more of the same notwithstanding the current empirical evidence that it isnâ€™t working demonstrates that they are impervious to logic. The impossibility of paying for their orgy of spending by raiding only the wealth of high-earning entrepreneurs and investors demonstrates that they are also impervious to math."

--That as well as the Rule of Law, the constitution, and just about every other rule that they impose on others.

Ignoramus

It's the spending, stupid!

Since WWII our federal government has taken in around 18% of GDP and spent around 18.5%. There's been just a little variance around these numbers. Notably, we've had different tax regimes in place over the years but they've had little effect on this outcome..

The following is out of the recently released Obama 2011 budget.

2010 receipts are 14.8% of GDP, which is below the long-term average. This happens in a recession, especially because there's "leverage" in progressive tax rates.

But the biggest thing going on in Obama's ten-year projections is its assumption that spending -- which used to average around 18.5% of GDP -- will stay over 25%.

So we take in 15%, and spend 25% -- how long can we do that? Arguments about whether and how to extend the Bush tax cuts are beside the point. We'd have to double the personal income tax to close this gap.

Also, the Obama budget assumes a 4.25% GDP growth rate in each of the next few years, which is totally unrealistic. The CBO is instead using 2.2%. I think we'll be lucky to hit the CBO's 2.2% on current course.

ElamBend

I love this fallacy of blaming the tax cuts because the easy response is to ask whether, if they had not occurred, would the budget be balanced. The answer, of course of no, spending has outstripped revenue, even if the tax cuts had never occurred.

Mesa Econoguy

The entirety of left-wing economic expertise can be summarized thusly: Paul Krugman.

Take the opposite side of every one of his trades.

Ted Rado

Yoohoo! Has anyone in government ever heard of a family budget? Every year, I sit down with pencil and paper and work out a budget for the coming year. If there are areas of high expenditure, I must reduce expenditures elsewhere. As a result, I have no debts and live within my means. When I spend money, I know I can afford it and hence enjoy it more.

If I were to spend more than I bring in, I would wind having to borrow the difference. Payments would then reduce the money left to be budgeted, not to mention money blown as interest. I would wind up much worse off than if I had spent within my means in the first place.

Any idiot understands this. What does this say about our geniuses in Washington?

Not Sure

"Any idiot understands this. What does this say about our geniuses in Washington?"

I think most of them *do* understand this.

They're just figuring that they can keep things limping along so that they keep getting paid (think: Mel Brooks/Blazing Saddles- "We have to protect our phoney baloney jobs here, gentlemen!"), and expect to be out of office WTSHTF.

Of course, there are sure to be some in DC who honestly don't have a clue at all.

That's a heck of a choice, isn't it? Evil or stupid- either way, we're screwed.

Noumenon

I'm with the linked article. It only seems like he's blaming the tax cuts because that is the active component of the "economic nihilism." The passive component is Republican unwillingness to cut spending. Those two things together head the train toward the rock wall.

The Democratic version, spending plus taxation, may be just as unsustainable if it assumes they can raise taxes forever. But it's not guaranteed to fail -- the taxation might work.